15 March 2018

Childcare vouchers were due to close to new applicants on 6 April 2018.  However there has been a delay by six months due to an intervention by the Democratic Unionist Party (DUP). This is because the tax-free childcare scheme which is due to replace childcare vouchers has suffered a succession of problems.  Glitches on the HMRC website have meant that thousands of parents have been unable to either set up tax-free accounts or access the money they had paid into them.

Qualifying for tax-free childcare

However, if they qualify, parents are still able to apply for tax-free childcare which is worth up to £2000 per year.  Each parent entering the scheme must be:

  • over 21 and working;
  • each earning an average of at least £120 per week
  • and can be employed or self-employed. 

although a parent may also be eligible if they have a partner who gets benefits such as Carers Allowance, Employment and Support Allowance or Incapacity Benefit.    

How tax-free childcare works

Eligible parents of a child under the age of 12 (or 17 if disabled) can open an online account which they then pay into to cover the cost of childcare with a registered provider. The government makes a 20% contribution to childcare, so for every £8 paid into the account, the government adds an extra £2 (up to £2,000 per child or £4,000 if disabled). 

30 hours free childcare

Further help is available for eligible parents of 3 and 4 year olds in England where a total of 30 hours of free childcare has been available since September 2017. There are similar schemes in Scotland, Wales and Northern Ireland, but the number of hours is different in each nation.  The eligibility criteria are the same as for the tax-free childcare accounts.

The NHBF’s CEO, Hilary Hall comments:

“It’s crucial that the system works for parents signing up to the tax-free childcare scheme. Until that happens, the NHBF welcomes the temporary reprieve for childcare vouchers to give working parents realistic options for help with childcare costs.”

Further information on childcare funding:

-      Visit the GOV.UK website  for more information on the tax-free childcare scheme. 

-      Visit the mygov.scot website for information on childcare funding specifically in Scotland. 

-      Visit the gov.wales website for information on childcare funding specifically in Wales. 

-      Visit the Employers For Childcare  website for information on childcare funding specifically in Northern Ireland.